Just one full week into the New Year, we at MetalMiner were confronted by several situations that have upset the commodity metals status quo. Up was down, left was right, black was… you get the picture.
The biggest news came as just as few lines in a massive government report out of Beijing. China looks like it’s finally giving up on its long and expensive World Trade Organization fight over rare earths with the US and Japan. A legal skirmish that began years ago. China has been using a rare earths export quota to essentially control prices of the roughly 90% of rare earths that come from its provinces.
Just like Det. Jane Rizzoli is handcuffed to Dr. Maura Isles, China is handcuffed by WTO rare earths rulings it lost. Source: TNT
So, why would China just give up on its nearly 3-year RE fight? Attrition, mostly. China is a WTO member, too, and keeping up the fight at this point would be like Rizzoli not listening to Isles in the last 5 minutes of an episode when every call she’s made has been right for the first 50 minutes. Even China has a breaking point. Read more
Recently, Lynas Corporation founder and chairman Nicholas Curtis signaled that he’s fed up with the down-in-the-dumps, low-price rare earth metal market (our cheeky and unfounded speculation) by announcing his departure from the company after 14 years (according to the West Australian’s reporting).
As both Curtis and MetalMiner say goodbye to the REE market of 2014, we thought we’d take the opportunity to recap the year with a Best of Rare Earths selection.
What the Year in Rare Earths Prices Looked Like
In short, not awesome for Western rare earths producers, such as Lynas and Molycorp. For buyers, the deeply discounted REE complex is only made better by the prospect of going even lower; MetalMiner’s Rare Earths MMI® is having a hard time finding a true floor.
Despite a rising price trend for both HRC and CRC that began in June 2013, we noted back in January 2014 that the price increase for both forms of coil had started to lose some momentum and, indeed, prices have moved flat/down ever since.
Source: MetalMiner IndX℠
As with other industrial metals, our view on steel prices is kind of neutral. Prices are showing some resilience, but they are not showing significant strength either. We don’t see steel prices significantly rising in 2015 while commodity prices remain low.
Our MetalMiner IndX tracks worlwide metal prices every day. The global precious metals – palladium, platinum, silver and gold – are followed mainly for their potential as investments, but their appeal as industrial metals came to the fore again this week.
The film industry, banking transparency, renewable energy technology, cleaner emissions and even rural electrification all exist because of how hard the precious metals work. If you weren’t thanking gold, silver, platinum and palladium yesterday then you should apologize and ask for forgiveness right now!
No catalytic converters without palladium.
The Solar-Silver Connection
Silver has fallen for much of the last 3 months in the face of a strengthening US dollar, but it may have bottomed out this week after prices bounced back. It wasn’t a weaker currency, though, that came to the rescue. The dollar continues to strengthen. What some are attributing silver’s turnaround to, is higher consumption by manufacturers of crystalline silicon photovoltaic solar panels. Every solar panel contains between 15 and 20 grams of silver. At today’s prices, that’s about $20 per panel.
Ok, so Lynas Corp. and Molycorp aren’t technically in a fight, and steel is not coming in the crunchy form of your grandmother’s classic dills, and Autodesk…well, Autodesk did announce new applications, so we’ve got nothin’ on that front…but the point is that these are the ties that bind the Best of MetalMiner: Thanksgiving 2014 Edition.
It’s definitely that time of year again: to look back at the most-read stories on MetalMiner over the last quarter or so.
So back to that “fight” regarding Lynas and Molycorp…
1. Lifton vs Kingsnorth: Don’t Believe Lynas Corp, Molycorp Hype?
Celebrity Deathmatch Copyright: MTV
Our most-read story over the past three months focused on the “Celebrity Deathmatch” of sorts we dreamed up within the rare earth metals sector: that between renowned REE analysts Jack Lifton and Dudley Kingsnorth.
Welcome back to the MetalMiner Week-In-Review, now reporting live from Australia’s University of Queensland. Okay, not really, we would just like to talk about the research being done there in phytomining. What’s phytomining, you ask?
Harvesting valuable metals from plants. Growing plants containing nickel, zinc and cobalt—some of our favorite mined minerals—and harvesting them above ground, not below.
No, wrong plants!
“We have identified a whole lot of new species which could be used for phytomining which weren’t previously known to science,” Dr. Peter Erskine, one of the researchers working to make the process suitable for conventional mining companies, told Fox News while throwing another shrimp on the barbie. Erskine and his colleague Dr. Antony van der Ent, have discovered about 25 species of plants called ‘hyperaccumulators’ that take up high concentrations of metals from soil, that could form phytomining farms.
Some have gone back to market normalcy (check out platinum and palladium). Others have taken even a bigger dive than the dog days of summer brought (gold and silver) and some are extending market flatness with a staycation of sorts (raw steel, you still there?). Here’s MetalMiner’s recap of the returning metals as they stare down Q4 with the rest of us.
You’re going to replace me with Rhodium? Really? Rhodium?
“Have you ever known that you’re my hero…You’re everything I wish, I could be… I can fly higher on the LME, because you are the wind beneath my wings.”
This may have been Bette Midler singing about her then-piano player Barry Manilow – except for the London Metal Exchange part – but this was finally the week when loyal, dutiful palladium stepped out from the considerable shadow of platinum and became a precious/industrial metals star in its own right, reaching a 13-year high on the LME (an astounding $911 an ounce) and widening the gap between itself and platinum as the favorite precious metal of traders this year.
How high has palladium soared this year? It’s leaving the eagles in its dust. It’s singing “Copacabana” in Japan, China and the US, all markets where palladium bar finished up this week. It’s causing automakers to rethink using it for catalytic converters rather than substituting CHEAPER platinum in new cars. Yes, platinum is now the metal that you use to slum it and save a few pennies when it comes cleaning the exhaust air that your car spews.
“Don’t listen to what that grifter platinum’s trying to tell you. I’m the one who’ll keep your emissions clean. Good ol’ palladium. I’ve always been here and always will be. Stardom won’t go to my head.”
“Our steel price index has been trending quite flat since last year. Steel demand looks optimistic for some, but not that bright for others. The US steel industry had better-than-expected performance during the second half of 2013, but a brighter future is still not certain.”
That’s what our Lead Forecaster, Raul De Frutos wrote back in May and not much has changed in steel since then.
It’s not as if the steel story is over with a quarter of the year left. 2013 saw a late-year price surge and all of the market conditions necessary exist to for another late-year rally. Steel gets an incomplete so far, so stay tuned.
The year in precious metals has been dominated by the South African platinum mining strike as well as unrest in Ukraine affecting the prices and supplies of number two platinum and palladium producer, Russia. These issues, coupled with strong currencies, especially the US dollar which has kept down the price of gold, have pushed palladium to a 13-year high and platinum higher as well.
The other big story in precious metals through the first half of this year has been the end of phone-based daily price “fixings” in silver and, soon, gold. For both producers of silver and gold and the banks who come up with prices, electronic, auction-based pricing systems offer much more transparency and trade volume options than the archaic daily fixes. The Silver Fix ended August 15 and the new Thomson-Reuters/CME Group LBMA Silver Price has determined the daily price since then.